-=?GLOBAL F!,..ANCE

F NANCE'S 1996GLOBAL

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emerging economies heating up again, their companies are making a strong

reappearance in global debt and equity markets. Moreover, now may be the time for

--corporations from industrialized countries to seek out a partner or set up a green,field operation in these vibrant markets. So which bankers can best make things happen?

Global Finance here profiles the 26 corporate finance, underwriting, and research teams

that know emerging markets best-the superstar analysts and bankers in Latin America,

Asia, Central and Eastern Europe, the Middle East, and Africa. Ellen Leander, in New

York, interviewed banks, securities firms, and their clients to come up with ten teams for

Latin America. From London, lain Jenkins similarly discovered nine winning teams in the

emerging markets of Europe, the Middle East, and Africa. And in Hongkong, Mike

Steinberger's reporting yielded seven in Asia. The winners are:

APRIL 3.996

GLOB"L FI,""NCE

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CORPORATE FINANCE, AFRJCA

Citibank, London

Cashing in on its extensive branch network, Citibank's emerging

markets group is grabbing a sizable portion of the growing capital

market and corporate finance activity in Africa. The team,

which includes Arnold Ekpe on corporate finance in

Johannesburg and Bob Annibale, treasury capital markets, and

Hiren Singharay, syndication, both in London, has surprisedmany observers. "When they came to the market trying to raise

$40 million for a Senegal [peanut] producer, people laughed in

their faces," says one fund manager. "But they got it away."

Citibank is running the global and domestic mandates for

the $ jO million privati::ation of Kenya Airways. The deal is the

biggest IPO ever seen in Kenya and will add 6% to the capital-

i:~tion oi the Nairobi stock exchange.Other deals include the first convertible bond issue in South

Africa tor Investec. the investment banking group, and an $80

million faciliry tor the state oil company in Ghana.

"\Ve pull in different players for different deals, mixingpeople from our local branches with specialistS from London,New York. and Johannesburg," says Annibale. "Our strength is

the continuiry of our staff and the fact that we span both

Anglophone and Francophone Africa."

EQUI7Y RESEARCH, CENTRAL AND

EASiER.'f EUROPEING Barings, London

Turkeyand Israel. Institutions say that Blair is playing the role of

the Pied Piper. leading increasing numbers of investors into one

of the last em~rging market frontiers. He and his team of seven

are seen as the most comprehensive brokering operation in the

region.After t\vo years of knocking on doors and drinking sweet

Arab coffee, institutions say that Blair has built up good politicalcontacts and relationships with a number of companies in

Morocco, Jordan, and Egypt. He earned a loyal band of followersafter a spectacular rise in many Middle East markets in 1994. Last

year a more modest growth of 11.2% in Jordan and a 10% return

in Morocco kept the momentum going.In 1996 the problem facing Blair and his team is selling the

region to foreign investors. "Perception is everything," he says,

"and bombs in Israel aren't helping. There are still liquidity prob-

lems in many of the countries. But it is happening slowly."

Most brokers are tooling up in Central Europe, but it is too early

to say that any of the operations are working, with the exceptionof the ING Barings team. "The combination of the old ING team

and the Barings research operation has created a sophisticated

research operation," says one institutional investor.It is run by Philip Poole, a macroeconomist who has at his

command the savvy trading skills of Paul van de Bogart and nine

other team members who specialize in countries and products in

the region.A recent comparative survey of the construction industry in

the region went down particularly well with clients. "We might

know a company in Hungary very well, but we won't have any

idea whether it is good value compared with a similar companyin Poland. This pan-Central European research is the way for-

ward," says another fund manager.Says Poole: "We take a macro view, putting debt and equity

under one roof. The idea is to try to catch the flows of debt and

equity betWeen countries in the region."

EQurrY RISnRCH, AFRICA

Rice Rinaldi, johannesburg

Interest in Africa has soared with the inclusion of South Africa

in emerging market indexes and the recent high-flying perfor-mance of many African markets. Mining is ofren the most obvi-

ous area of investment, and Rice Rinaldi is known as the "best

mining shop in the region."Mike Wuth, who heads strategy at the firm, and his team

of Philip Murphy, George Grohmann, and Tony Cadle cover

anything from ferrous to precious metals from South Africa to

Gabon, Zimbabwe, and Liberia. "What they don't know

about mining isn't worth knowing," is the comment from one

institution.Most people think of gold or diamonds when they think of

South Africa, but Rice Rinaldi has been encouraging investors to

look at ferro-alloys investments. "Gold mining is downscaling,

EQUiTY RESEARCH, MIDOLE EAST

ING Barings, London

" Angus of Arabia" is the label sticking to Angus Blair, head of

the Middle East team at ING Barings, which also has offices in

APRIL :!.996

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GLOBAL F,NANC

but South Africa has a cost-competitiveness in ferro-alloy prod-

ucts," says Wuth. "That's where we have been encouraging

investors to go." The firm is remembered for calling the bottom

of the commodity cycle to within a couple of days in late 1984.

PROJECT FINANCE, EASTERN EUROPE

Deutsche Morgan Bank, London

Rivals say that wherever you go, even into the far reaches of the

former Sovier Union, there will be someone from the Deutsche

Morgan Grenfell team advising on the financing for an oil

pipeline, a telecom deal, or a motorway project. The ubiquitous

eight-man team run out oflondon by Stephen Uhlig, advised on

some of rhe highesr-profile deals in the region last year.

Top of the list was financing the $400 million M5 motorway

projecr in Hungary. Next came the advice to a consortium ofI! Agip, Conoco, and Shell on financing the purchase of litvinov

and Kralupy oil refineries in the Czech Republic. "There is lim-

ited experience in these markets, so we keep to bread-and-butter

financing," says Uhlig.Other members of the team are Vadim Benyarov, Andrew

Bride, Luke Bridgeman, Elaine Coomber, Robert Heilbronner,

Matr Johnson, Paulo Pascarelli, and Karsten Sinner.

TRADING

AND

ANZ, London

Fund managers like ANZ Capital Markets' emerging market debt

team because it doesn't bombard them with unnecessary

research. Says one: "When you get something from the ANZ, you

read it. They don't pretend to be comprehensive. But when they

like some emerging market debt, it is worth taking note."

In March 1995 they tipped Yugoslavian debt, which was

trading at 25 cents to the dollar. Within tWo weeks it was trading

at 30 before rocketing to a high of 62.

The team of 40, based in London, does not only look at

the markets of Eastern Europe. Its members cast their eyes as

tar afield as Cuba and Venezuela, where they made some good

calls last year. They are also the biggest traders in Nigerian

Says Jerome Booth, who along with Neil Lockwood runs

the fixed income research: "We don't try to duplicate what

other firms do. Our style is to locate opportunities and thor-

oughly research them. We don't divide the world up geograph-ically. This allows us to give clients an idea of relative value

across markets."

CORPORATE FINANCEGoldman Sachs, New York

TRADING, ~

Renaissance Capital, Moscow

MERGERS AND ACQUISITIONS

CS First Boston, New York

Although other firms landed more deals in the last year, it was

the mergers and acquisitions done by CS First Boston's seasoned

team that landed on the front pages. "Cross-continental deals

seemed to be their specialty," says one competitor. For example,

the group advised Maxus Energy when it was acquired by

Argentina's YPF for $750 million, and the Bank of Nova Scotia

when it acquired a majority stake in Mexico's lnverlat bank. The

current roster is no less impressive, with the recent announce-

ment of British ICI's $390 million acquisition of Latin multina-

Jaime Yordan'5 corporate finance team was hot in 1995, com-

pleting some of the region '5 most prominent deals. For example,

the group structured a $2.5 billion pipeline project for

Colombia's Ecopetrol in October and a $185 million exchange

offer for Southern Peru Copper in December. The group is also

particularly strong in Mexico, where "they have a number of very

good clients and very strong relationships," says one competitor.

Competitors also attribute the group's success to the decades

of experience its members have under their belts. Says Yordan:

Richard Deitz and his four-man team are the aggressive bond- "It's like being a heart surgeon. If he has done open heart surgery

trading arm of Renaissance Capital, a securities operation formed 100 times, he is going to be better than someone who has done

late in 1995 by former CS First Boston employees in Moscow, it just a couple of times." Almost all of the top people have been i

where the bond market is booming. together at Goldman since 1991. Members include TIm Kingston

"We like the way they talk to us in our lan~ge of risk man- and Eduardo Gentil (recruited two years ago from ING Bank) inagement while still having inside knowledge of me Russian mar- .Brazil, Alex Rossi in Argentina, Guy Erb in Mexico, Roger .

ket," says one big Western client about this thriving area of Harper and Allen Sanguines in Colombia and Venezuela, and

financial activity. Institutions wanted to take advantage of the Patrick Sullivan for Latin American financial institutions.

yields of 100% that were offered in the nascent Russian bondmarket last year, but they needed someone to guide them through ,

the "Wild East" of Moscow's financial markets.

Renaissance has achieved this by pulling in Russian traders

who have worked for Western firms, such as Maxim Skorik, for-

merly with SBC Warburg in London. Other members of the team

include Rakhim Bakhromov and Alexei Orekhov. The team was

strengthened by the arrival of Dirk Damrau from Salomon

Brothers. He will head up the research operation.

Says Deitz: "Clients like the fact that we have such a

large proprietary trading operation. At anyone time our posi-

tion is bigger than any of our clients'. We trade our position

alongside them." I

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GLOB.L F,N.NCE

tional Bunge Paint, and the group's advisory role with Banco de

Santiago in its merger with Banco O'Higgins. Making good use

of close relationships with many Latin governments, it is advis-

ing the Peruvian government on the privatization of its largest

polymetallic mining company and Colombia on the privatization

of a 2,OOO-megawatt electric plant. The competitor ruminates:"At the pace they are going, they could top the league tables in

1996."Team members include Scott Lindsay, co-head of M&.,\

worldwide; George Weiksner, co-head of global corporate

finance; David Anderson, head of the Latin Ametican finance

group; and Frank Lopez, coordinator of the Latin American

M&A effort.

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.~~:0) mandate to be the top research team in Latin America." Many

investors already think they are.

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EQUiTY TRADING AND SALES

Union Bank of Switzerland, New York

UBS Securities' equity trading and sales team wins in its catego-

ry-although it has been in business for just about a year-in

part because of the real concern that established firms show

when discussing UBS's new operation. Over the past year the firm

has built its force as part of the firm's overall shift into Latin

America. Notes one competitor: "They have recruited a team

from some of the best people out there. We are keeping a close

eye on them." Says an analyst: "There is a general perceptionthat all the firms are going to have to move over and make room

for the UBS team." Fashioned with alumni from Barings, Smith

New Court, and Latinvest, as well as other shops, the team's head

count now stands at 20. Four more people are expected to be

hired in 1996. The team is headed by Lucia Skwarek, who was

recruited from j.P. Morgan and is known as both a skilled trader

and an adept manager. Other members include Paul Wargnier,

head of research; Simon Edwards, sales, New York; Mark Fenton,

sales, London; and traders Chris Tucker and Enrique Comacho.

To complement its sales, trading, and research groups, the firm

plans to open a Latin American investment banking arm based

in New York during 1996, says Skwarek.

EQuiTY ORIGJNATION

Morgan Stanley, New York

Competitors and analysts consider Morgan Stanley's potent com-

bination of innovation and experience to be the keys to the

team's huge success in equity origination for the region. Last year

was the toughest in recent memoty for Latin American ADRs,

owing to che Mexican peso crisis, but even so, Morgan Stanleymanaged to do a number of hot deals. These include a $1 i 1.7

million ADS offering for Chile's Banco Edwards, a $112.2 million

lPO for Pao de A~ucar of Brazil, and a $70.7 million global pri-

mary offering for Banco Industrial Colombiano. An October

exchange offering for Peru's Crediccorp, in which related insur-

ance and asset management companies were folded into a single

holding company "was a very difficult transaction from a valua-

tion standpoint," says a lawyer familiar wich the deal. Says team

t::J:';;;ifi~ head Francisco Gros, who is said to have a knack for spotting

t'!,;!5~;'r) trends: "This is a transaction model chat is going to be repeated.",""'","""'"w~1~;'!!ii The team ranks flfSt in number of ADR offerings underwrittenr;}~~:~1~' i since January 1995 and second, after Merrill Lynch, in dollar value1.- -',c[j~~~, of such issues: $1.11 billion. Team members include Justin Manson" " ,~i?~~l~': for Mexico; Jon Weber, South America; ~laude Pupkin, Chile and

l~i-igii,: Peru; and Normand Savoie from the capital markets desk.

;~{~,:l~~~~;;:~f; EQUiTY RESEARCH'~;'-"~'" B S d N \l krt;;;t~$}# anco antan er, ew lor

rt)-:~t)ff!Jft~~;;,j;~~} In just 12 months, Santander Investment's Latin America equity""",""i',;:"!~ research effort has exploded and now boasts at least 29 analysts

.;~I;;'~l~ 1 and economists in New York and Latin America. The infrascruc-',c.'.~""~':.>.iJi~; ture chat team leader Juan Carlos Garcia has built rivals che heft-,';.,,~.,

c:;;£??;,¥',f of che more established houses, such as ING Barings and J .P.,?; ",)"c cJ:: Morgan, and che talent pool he has created is equally star-stud-

"It; ded. Recent hires include Jonachan Morris, formerly of Latinvest", I and now head of Mercosur research, and Richard Segal, previ-

ously of Bank of America, now chief economist.The result of his efforts is a research product that investors

and rivals alike hail as boch detailed and circumspect. One fund

manager says che reports give the kind of "on-the-ground, nircy-gritty information" chat many New York-based competitors sim-

ply don't have the ability to deliver. Says GarcIa: "We have che

DEBT ORIGINATION

J.P. Morgan, New York

In the field of Latin bond underwriting, there may be bigger

players-indeed, in most league tables ].P. Morgan only ranks

seventh or eighth, with 10 deals worth $1.45 billion complet-

APRIL 1.996

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Chile. Now the group is building up its presence in Venezuela

and expanding its office in Mexico as pan of its strategy to be

a strong local corporate player.

"The local markets are key for growth, going forward," says

Dizard. His team members include Aidan Freyne, sales,

London; Curtis Mewboume, trading, London; Yoshito

MatSuura, trading, Tokyo; Joe Draper, sales; Tokyo; Paul

Masco, Brady trading, New York; Summit Roy, derivatives, NewYork; Gordon Tanner, local m,arkets, New York; and Mike

Corbat, sales, New York.

ed in 1995-but competitors agree that there is perhaps no

other firm as highly regarded. "J.P. Morgan is our only serious

competition," says one investment banker, a sentiment echoed

I by dozens of others.

The firm has a solid reputation as an innovator-it was

the first back in the market with a $189 million Yankee bond

offering for Telecom Argentina after the Mexican peso deval.

uation, and it has completed three eurolira offerings for Latin

c,.,.,..;,,~ American companies. Also, Argentine telephone company~ '-"'.~;;'"'~ Nortel will soon issue 6.55 million debt securities that will be

Iexchangeable for American depositary shares upon maturity-an invention of Morgan's. To top it all off, the group served as

financial adviser to the finance minisrry of Mexico during its

negotiations with the US treasury over the aid package. Group

members include Mark Hall, Mariano Mendez, Richard

I McNeil. Claudia Franco, Simon Noble, and team leader

Rachel Hines.

SECURITIZATION

ING Barings, New York

After the Mexican peso crisis, securitization took off as an alter-

native way for Latin American companies to access capital, and

the ING Barings team is regarded by both clients and competi-

tors as the most innovative player in the marketplace. For

example, in December the group placed $525 million in secured

export credit notes for Grupo Mexico, a mining company. The

notes, secured by export receivables and company proceeds,were issued in four separate tranches that were tailored to the

different structural and maturity needs of the insurance compa-

nies and institutional investors that participated. Another

recent deal, the $130 million capital-raising for Mexican baker

Grupo Industrial Bimbo, was partly financed by the

International Finance Corporation to reduce the level of sover-

eign risk. It was only the second such deal structured under that

new IFC program.

Team members are Tim Hall, head of private placements;Peter Miller, head of loan structuring; and Leonel Narea, head of

Latin debt capital markets.

DEBT RESEARCH

Merrill Lynch, New York

I Merrill Lynch set tongues wagging in January with the

announcement that it had acquired most of Salomon Brothers'

renowned debt research team. The infusion propelled Merrill to

the top of debt research, and competitors are wary. Says one

executive recruiter: "This was a huge win for Merrill Lynch and

a bit of a setback for Salombn." Joyce Chang, who now heads the

entire emerging markets debt research team, says only: "It was a

formula that worked at Salomon, and we wanted to keep it in

place." Besides Chang, team members from Salomon includeVincent Palermo, Valerie Chang, and Alicia Duran. Already

installed at Merrill were Allen Vine, Bernard Pallicer, Jane

Brauer, and James Cochran.

At Salomon, the team was renowned for its timely mar-

ket calls and ability to combine technical and analytic fore-

casring techniques. Now, Chang says, she plans to bring thoseforces-in combinarion with Merrill's recognized team-to

bear on the local Latin debt markets. Moreover, thegrotip

plans to launch a model portfolio to run in a monthly publi-

cation covering local currency and government bonds as well

as eurobonds.

LOAN SYNDICATION

Chase Manhattan Bank, New York

Chase's hammerlock on Latin American loan syndication is

growing more. profound; say competitors, as the merger. with

Chemical is finally drawing near completion. During 1995 the

group completed nine transactions worth more than $1.86 bil.lion, a share of more than 14% in a highly fragmented but

growing market of $12.9 billion in 1995. When Chemical's

transactions are added in, the tWo banks' combined share soarsto almost 17%.

To the Chase team's credit is a host of innovative transac-

tions, including a $225 million syndicated loan with a five-year

maturity last October for Colombia and the $800 million

financing for the acquisition of Maxus Energy by Argentine oil

company YPF. The group, composed of Stephen Thorington

and Randi Melzi in structuring and Michael Buckley, in distri-

bution, also did loan syndications for all three of Chile's power

companies last year. Under the new management structure,

they report to Peter Gleysteen, who is the global head of syndi-

cated loan structuring, and Greg Nelson, head of syndication

and distribution. .

DEBT TRADING AND SALES

Salomon Brothers, New York

Among Latin American debt traders, Salomon Brothers is stillthe top house despite the defection of the bulk of the researchteam to Merrill Lynch earlier this year. "The firm's strengthstems from a good early call in the Brady bond market in the1980s," says one competitor. "They have a real niche in Bradybond trading."

Team head Stephen Dizard, who has been with the groupfor 10 years, has overseen its growth through a series of strate-gic alliances with Latin American local firms such as theMerchant Bankers Association in Argentina and Celfin in

APRIL 1.996

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